Fact Check: '77 cent' claim on wage gap misleading as it is persistent

Monday

Apr 14, 2014 at 12:00 PM

Few experts dispute that there is a wage gap, but differences in the life choices of men and women — such as women tending to leave the workforce when they have children — make it difficult to make easy comparisons.

By Glenn KesslerThe Washington Post

"Today, the average full-time working woman earns just 77 cents for every dollar a man earns in 2014, that's an embarrassment. It is wrong." — President Barack Obama, remarks on equal pay for equal work, April 8.

In 2012, during another election season, The Fact Checker looked at the math behind this factoid and found it wanting, even though he is citing Census Bureau data.

We also called out the president when he used this fact in the 2013 State of the Union address. And in the 2014 State of the Union address. And yet he keeps using it. So now it's time for a reassessment.

Few experts dispute that there is a wage gap, but differences in the life choices of men and women — such as women tending to leave the workforce when they have children — make it difficult to make easy comparisons.

The president is relying on a simple calculation from the Census Bureau: a ratio of the difference between women's median earnings and men's median earnings. (The median is the middle value, with an equal number of full-time workers earning more and earning less.)

That leaves a pay gap of 23 cents. But the Labor Department's Bureau of Labor Statistics (BLS) shows that the gap is 19 cents when looking at weekly wages. The gap is even smaller when you look at hourly wages — it is 14 cents — but then not every wage earner is paid on an hourly basis, so that statistic excludes salaried workers.

Depending on how you run the numbers, the gap can go in the other direction as well. Heidi Hartman, president of the Institute for Women's Policy Research, said that the gap widens to 27.6 cents if part-time workers were included.

The problem is that these broad-based calculations tell you little about what is happening in the work force. Annual wage figures do not take into account the fact that teachers — many of whom are women — have a primary job that fills nine months out of the year. The weekly wage is more of an apples-to-apples comparison, but it does not include as many income categories.

June O'Neill, a former director of the Congressional Budget Office who has been a critic of the 77-cent statistic, has noted that the wage gap is affected by a number of factors, including that the average woman has less work experience than the average man and that more of the weeks worked by women are part-time rather than full-time. Women also tend to leave the work force for periods in order to raise children, seek jobs that may have more flexible hours but lower pay and choose careers that tend to have lower pay.

Indeed, BLS data show that women who do not get married have virtually no wage gap; they earn 96 cents for every dollar a man makes.

In 2011, in an report titled "Gender Wage Gap May Be Much Smaller Than Most Think," economists at the Federal Reserve Bank of St. Louis surveyed economic literature and concluded that "research suggests that the actual gender wage gap (when female workers are compared with male workers who have similar characteristics) is much lower than the raw wage gap." They noted that women may prefer to accept jobs with lower wages but greater benefits (more flexible parental leave) so excluding such fringe benefits from the calculations will exaggerate the wage disparity.

Meanwhile, men tend to dominate the most remunerative majors in college, such as petroleum engineering and naval architecture, while women flock to the least remunerative options, such early childhood education and social work.

We do not want to suggest there is no pay gap. A report by the American Association of University Women found that, after accounting for a variety of factors, including college major and occupation, there was an unexplained seven percent gap one year after graduation. The gap then grew to 12 percent after ten years. But that's still nearly half the gap touted by the president.

The White House discovered last week that broad calculations of wages can yield unsatisfactory results. McClatchy newspapers did the math and reported that when the same standards that generated the 77-cent figure were applied to White House salaries, women overall at the White House make 91 cents for every dollar men make. White House spokesman Jay Carney protested that the review "looked at the aggregate of everyone on staff, and that includes from the most junior levels to the most senior." But that's exactly what the Census Department does.

Betsey Stevenson, a member of the White House Council of Economic Advisers, acknowledged to reporters that the 77-cent figure did not reflect equal pay for equal work. "Seventy-seven cents captures the annual earnings of full-time, full-year women divided by the annual earnings of full-time, full-year men," she said. "There are a lot of things that go into that 77-cents figure, there are a lot of things that contribute and no one's trying to say that it's all about discrimination, but I don't think there's a better figure."

From a political perspective, the Census Bureau's 77-cent figure is golden. Unless women stop getting married and having children, and start abandoning careers in childhood education for naval architecture, this huge gap in wages will almost certainly persist. Democrats thus can keep bringing it up every two years.

There appears to be some sort of wage gap and closing it is certainly a worthy goal. But it's a bit rich for the president to repeatedly cite this statistic as an "embarrassment." (His line in the April 8 speech was almost word for word what he said in the 2014 State of the Union address.) The president must begin to acknowledge that "77 cents" does not begin to capture what is actually happening in the work force and society.

[After an online version of this column appeared, the president dropped any reference to "77 cents" in his radio address on Saturday about the wage gap. This is certainly a good start, and we will monitor how he frames this issue in the future.]